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Feb 28, 2023

Bankruptcy looming for Cineworld

Cinema giant owes more than $5 bn in bank and private placement loans

Cinema giant Cineworld has warned shareholders that there is ‘no guarantee of recovery’ from its bankruptcy protection filing, which puts more than 25,000 jobs at risk.

The company entered a Chapter 11 SEC filing, which proposes a plan of reorganization to keep the business alive and pay creditors over time, last September. At the time, the company owed more than $5 bn in bank and private placement loans. In the six-month interim results for 2022, Cineworld reported losses of $364.9 mn.

The Chapter 11 filing has allowed Cineworld to immediately access $785 mn of a total $1.94 bn debtor‐in‐possession fund from existing lenders. The fund was used to help ensure the company’s operations continue while it implements its reorganization.

Post-pandemic and Chapter 11 restructuring

In the latest update, the company says it has received non-binding proposals from several potential parties interested in acquiring some or all of the group’s business.

Cineworld says it is reviewing the existing proposals in conjunction with its advisers and key stakeholders but warns that it doesn’t expect ‘any sale transaction [to] provide any recovery for the holders of the company’s equity interests’.

Cineworld now expects to emerge from the Chapter 11 filing during the first half of 2023. 

‘The lingering impact of the Covid‐19 pandemic contributed to us continuing to face pressures, particularly in relation to our balance sheet and liquidity position,’ says Alicja Kornasiewicz, chair of Cineworld, in the financial update.

‘This led us to initiate a Chapter 11 restructuring process in the US, which aims to create a more effective business and strengthened capital structure to better position Cineworld for the future.’

Mooky Greidinger, CEO of Cineworld, says in the six-month update: ‘We commenced a Chapter 11 restructuring process in the US to implement a deleveraging transaction that will provide the financial strength and flexibility to accelerate and capitalize on Cineworld’s strategy.’